Bad mix: Politics, baht, and BoT

COMMENTARY

Published: 7 Feb 2013 at 00.00
Newspaper section: News

Thailand, like other developing economies, is doggypaddling to sustain herself and avoid being swept away and drowned in a rising ocean of liquidity. This is inevitable. In the global economic downturn, we too must bear the scars.

In our country, huge capital inflows have once again reignited the fierce debate about monetary policy and the battle between the government and the Bank of Thailand (BoT). As the voices of the two grow louder, we are at risk of losing out no matter who wins.

A surge of foreign capital inflows into the stock and bond markets led the baht to soar by 2% in the first two weeks of the year to peak at 29.60 to the dollar, which is among the fastest currency appreciations in the region.

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dearheart
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Discussion 4 : 07 Feb 2013 at 21.004
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It's funny about the baht - factors locally and within the region which we're led to believe lead to
the baht's appreciation, when reversed, have little or no effect on making the baht move in the opposite direction. I've seen numerous announcements by the BoT in the past when something like
an increase in unemployment in the U.S. has caused the baht to surge but when unemployment figures improve, the baht either stays about the same or even gets stronger. I think the real truth here
has nothing to do with foreign capital investment but everything to do with "hands on" manipulation of the exchange rate. The government wants a strong bah
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bkposter
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Discussion 3 : 07 Feb 2013 at 16.483
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The inflow of cash is because the USA and the UK is purposely devaluing their currency to try to inflate their way out of debt. Other countries like Japan are doing the same. The money will flow to where the best returns look to be. At the moment that is Thailand or any country that has strong exports stability and growth. Thailand is a relatively small market and it does not take big sums to move the Exchange rate. They should take some steps to stop the inflow of "hot money" and due to the already high inflation rate in TH can not resort to lowering rates as that will have a worse effect.
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Eric
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Discussion 2 : 07 Feb 2013 at 11.512
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I like this article as it stick to the facts devoid of emotion bias. Thailand open economy and positive economy attracts funds inflow. So far, inflows are for bonds and equities and has not created massive credit expansion of banks which '97 did due to loose regulation. The '97 credit expansion fueled real estate speculation which are unproductive and attract speculators and rest is history. Our resilent economy and better rates will invite inflows and strength Baht. Exchange is only 1 factor for Baht strength. I agree that BOT should be independent, free from govn influence.
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whatajoke
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Discussion 1 : 07 Feb 2013 at 09.131
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I fear that when the time comes, a sudden catalyst that causes short-term capital investment flight will precipitate a crisis that cannot be effectively managed over skype. Yingluck will be out of her depth, political considerations (ie the need to promote stability so a PT govt survives) and personal enrichment decisions will create all the wrong decisions, making it worse. That's exactly how the '97 crash unfolded, it could have been avoided to an extent.
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Bad mix: Politics, baht, and BoT | Bangkok Post: opinion